Monday, June 29, 2009

------A case study; You are the Chief Financial Officer for a company that manufactures a simple consumer product (let us call it Candy Bar SIWASH) that is taken as a snack by people. This company is multinational and this simple product has been in existence for a long time produced from two factories (one in Turkey and one in the UK) alongside other products. The city of Dubai was always supplied by the Turkish plant.

Well, due to natural growth and the two factory lines achieving full capacity, there will be a third factory next year which can also provide this candy bar. Thus, you will have to take some portion from each of the three factories and the unit cost will differ. How can you ensure that you are fair?

Well, one approach was to price the unit cost at an average price of the three factories thus, allowing your team in Dubai to not care who provides them with the product (assuming the packaging/taste/colors are the same as it is a simple product). Seems simple enough, and has been done before, but it is not the best answer. Why?

Because it does not reward good performers nor does it penalize bad performers. As the average price is taken, then factory managers will not identify ways to cost-cut as the incentive from them is gone. Their survival is not threatened. Meanwhile, if the price per unit is determined according to the lowest price, then the incentive is to receive orders or risk shutting down.

What does this have to do with Dubai and mortgage lenders? Well, yesterday I found out that Amlak has raised the profit rate (Islamic interest rate) on my mortgage to 7.75% which is ridiculously high. The reason behind it is due to the uncertainty in the freehold market and the fear of defaults by a significant number of people. In other words, let us penalize the ones who will be paying to make up for the defaulters. Well then, what is the incentive for a person to pay instead of deciding to default and run away? This definitely does not make sense.

Can the top officials of these organizations please go back to business schools or “common sense” school? These are the hard questions that the superiors of Dubai should be asking them. Just like the example of Simon Ford, Blue Banana owner who decided to flee as it was the better alternative to them, we will see many taking the same choice and the hole that is being dug will only become deeper and deeper. There is no confidence in any person of authority taking up the “common person’s” cause and becoming their advocate.

A simple suggestion: Amlak and Tamweel (alongside the semi-government property companies such as Emaar, Nakheel, and Dubai Holding) should renegotiate the agreed purchase prices of these properties that have a mortgage on them. They should share in the pain of “taghreer” which they have done by launching properties at highly inflated prices from their true value and reduce the prices as the end-user has to pay. So, the prices have declined by 40% (if not more) from their highs in the summer of 2008. How about a reduction in the selling prices by 20% (thus sharing in the burden with the purchasers)? Makes your mortgage payment easier, and encourages you to make it and stay instead of seeing that running away is your only option.

Sadly, I do not see RERA and/or Land Department of Dubai thinking strategically like this. Call me a cynic, but we all await the disaster that is coming. I hope I am proved wrong.

Tuesday, June 23, 2009

----Dear Friends (not Best Friends Forever which is another contest being conducted in Dubai at the same time);

Your first clue to the birthday party celebration is in the two paragraphs below. It will be fun for you to try and solve it. Give it a go and you should be fine. Pilots, cabin crew and military personnel have an advantage. I will be there at 9pm. Thus, give me a call by 8:30pm if you still have not figured it out. In addition, please feel free to read my blog and comment on the different opinions expressed. I look forward to it. See u soon and let us live it up before the Dubai Blues sets in.

Sierra looked up as she heard the echo off the valley. It was some distance away and she could not be sure of the words, although they sounded familiar. The language was not English which was her mother tongue. Where was Victor when you needed him she thought in frustration. Although Palestinian, he had lived in Calcutta, India and Lima, Peru for a number of years and spoke 8 different languages fluently. Then she remembered a trick her Body Combat instructor, also from Lima, had taught her.

"I have found out what the echo is telling me," smiled Sierra.

Did you?

Another clue (you can solve either one independently) is

c2is o slamelte ve 9

This is simple code used by Julius Ceasar to submit secret messages. A hint is that it is composed of 16 characters. So the number 16 will help you out. Again, if you cannot figure it out before the party, call me.

A present will be offered to the first person who is able to figure out both puzzles. Will it be you?

Monday, June 22, 2009

-------On the occasion of renewing my driving license today (gosh has it been ten years already) and the announcement of metro charges in the local papers, I thought that I would share a little tidbit of information for those curious and inquisitive minds amongst us. Did you ever wonder what happened to all of those non-UAE license plates (e.g. mainly from Oman and Saudi) that appear on Dubai’s streets?! What happens to the fines that they incur and do they have to have Salik (the tag that electronically charges your account once you cross the toll gates within Dubai)?!?!

Well, this was a major concern for a friend of mine when he first moved to Dubai. He is a Saudi citizen and as he was working in Dubai, decided to ship his car from Saudi to here and never bothered to get Dubai license plates for his car. Well, as many of us do, at least I speak for myself, is not pay for my parking and speeding tickets except when I have too (i.e. at the annual renewal of car registration). The thinking is; why pay for something until you absolutely have too and besides, maybe one of the royals will issue a pardon for speeding tickets during Ramadan or Eid or National Day so that we get an exemption or reduction in fees. Usually my annual fee is around 1000-2000, but lately it has been getting lower and lower :-).

Anyway, so this friend of mine was worried as he did not have to register his car and kept on accumulating fines and more fines. He was afraid that he might end up with a bill in the hundred of thousand Dirhams once they finally caught up with him. So, he made it his mission to find out!

It turns out that there is an agreement between the GCC countries to pre-pay for the cars registered in their countries, then pass the charges to the actual owners. The responsibility for this tracking falls upon the individual countries. Apparently, Dubai does that and ensures that the owner pays for all of his car fines when he renews. Meanwhile, Saudi Arabia does not have this system so they just pay for all of the fines for Saudi cars and keeps the fines in boxes without processing them further.

Thus, one of the cost-cutting methods for the cost of living (in addition to the flexibility of parking) is to get a Saudi license-plate car and have it in Dubai. It will save you a lot of headache and money. For Salik, I assume that it operates the same way, but I will have to check that to be sure.

Thursday, June 18, 2009

-----If you are a soccer fanatic like me, then most of yesterday was spent in front of the TV watching the final matches of the Asian Qualifiers. For background, ten teams were placed in two groups and they played each other team in their group home and away in a round-robin format. The top team and the 2nd placed team in each group would automatically qualify to the South Africa finals. Meanwhile, the two teams that placed third would still have a chance, but via a longer route; they would have to beat the other 3rd placed team, then beat New Zealand.

Now, there were 4 teams out of the ten that are Arab (Bahrain, Qatar, Saudi Arabia, and UAE). With them being placed two in each group, the ideal scenario for a true Arab sports supporter would have been for all 4 to qualify. The actual results; none of the 4 automatically qualified. Luckily though, we Arabs from Asia still have a chance as Saudi and Bahrain faced third in their groups. Thus, the winner in their duel will face New Zealand for the 5th place. For information, the four representatives of Asian football are Australia, North and South Korea, and Japan.

The sense of disappointment and frustration was evident on all of the Arabs and especially the Saudis during their final match in Riyadh vs. North Korea. Had Saudi won, then it would have qualified. That is hard to imagine if you saw their rusty performance yesterday. They lacked a competitive spirit, they did not display urgency; they were playing as if it was a practice session. A complete difference to their performance in 1994 whereas they shocked the football world by winning their group and did the Arabs proud.

Now, they will blame it on the coach, signing up another multi-million dollar coach who will get fired as soon as they stumble at the next block. After all, who can blame the players when princes interfere and determine whom should play (normally their favorite or the one from the club that they are responsible for). This is not acceptable! As mentioned in an earlier post, we need our sports teams to do us proud and become professional.

We are sick of them failing to do that! Time is running by and we are not progressing. We need to examine the structural roots of that and implement measures to rectify the problems. My layman’s impression is that it is a sense of arrogance and a laid-back attitude by the players. As the Arab proverb states: “You reap what u sow”.

Hopefully, our Arab breathren in Africa will have a better record. Finally, good luck to Bahrain! It would be great if the country of less than a million was able to advance. However, I will not be too disappointed if it was the Saudis who continued their 5 straight appearance in the World Cup Finals. After all, South Korea has made it now 7 straight times. We need to strive to better those sorts of records, in the sports arena and other arenas as well.

Sunday, June 14, 2009

------During the past week, it is hard for those living in Dubai not to have noticed the talk about Paris Hilton and her film shooting of the Middle East version of her reality show, My Best Friend (or something like that). Many newspaper and tabloids have been discussing this and talking about her stay in Fesitival City's Intercontinental Hotel which starts this upcoming week. Moreover, Festival City Mall is running a promotion (raffle) for the shoppers who spend 1000 AED with winners receiving Paris branded items. Love her or hate her; Paris Hilton symbolizes the epitome of using your status to further your own means.

Well, readers of 7 Days Newspaper (ironically printed only on weekdays now due to the financial crisis) have been following its own self-made celebrity, Eroll D’Souza. For background, 7 Days is followed regularly by the Western Expat population in addition to Western-minded Arabs. It is a newspaper that tends to be more critical of the government than other print media. In fact, Dubai Holding and its entities had strict instructions not to allow their advertisement budgets to be spent on 7 Days newspaper due to its editorial content. That is one reason that I enjoyed reading its readers letters to the editor because there was a lot of whining within it which allowed me to sense the frustration of the expats, the pulse of the street. That is where I was introduced to Eroll D’Souza, a regular ‘letter to editor writer’ who gets published.

The first time he caught my attention was when he started complaining about Tom and Jerry Cartoons and how violent they can be. Shortly afterwards, he had another letter published which stirred up significant controversy whereas he stated that he preferred cabin crew to be more men as ladies cannot carry heavy bags and luggage to the overhead compartments. Well, he stepped into a can of worms and struck a raw nerve as many indignant cabin crew (they read 7 Days regularly as I found out) started teaching him about duties and responsibilities of cabin crew and some threatening him with revenge. The outpouring of letters was so intense that he even published a letter apologizing for his arrogance and demanding mercy.The problem is when you become famous, it is like a drug and you need your fix at shorter and shorter intervals. Well, sure enough several weeks later, Eroll D’Souza needed a fix and what does he do; write a letter about the disappearance of the Air France flight (in the first couple of days) stating his theory about the Bermuda triangle. Needless to say, he suffered again as several readers showed him up again and belittled his theory.

This got me thinking. Eroll D’Souza has become Dubai’s own Paris Hilton (minus the looks and the money). However, some part of us is jealous with his fame (no PR is bad PR) while the other part sighs in relief that we are not ridiculed like him. 7 Days editors probably love Eroll D’Souza as he provides its readers with light entertainment at no expense. I have been grabbing the paper seeing to catch his latest idiotic opinion. Some people liken Eroll to those stockholders who hold 10 shares in a company, but want to express an opinion at the Annual General Meeting for that company; you know the ones with too much time on their hands.

So, Eroll do not let your 15 minutes of fame go to your head. Do not become a pawn by 7 Days to entertain its readers at your expense. Rather, utilize your new found frame for a worthy cause. It is a great opportunity to do that. Perhaps you can encourage high school kids towards social activism by relating your advice on how to get published.

Thursday, June 11, 2009

---According to The National newspaper, Saleh Obeid, a defender on the UAE National Football (soccer) team blamed fast-food for their failure to qualify as Asian representatives for the World Cup which will be held in South Africa in 2010. In the article, he claimed that many players, including himself, would have McDonalds twice daily in the run up to their matches. Moreover, he criticized the preparation (the team played against clubs and not national teams) in addition to some other factors.

My initial reaction, and any other rational person, is GROW UP! As a professional player, you should know that fast food is not something that you should be having, especially in the run-up to important matches. The same goes for the whole team who have let down their whole nation. But can we blame them?! No way, let us blame something else and come up with lame excuses like the ones espouged by Saleh Obeid.

This I feel is symbolic of the UAE nation. As a young nation, it seems they are going through growing pains and have not fully developed yet. When they achieve a success, then it goes to their heads. When they fail or stumble, then instead of getting back up, learning from it and committing to improving, they play the blame game and find something to blame it on. That is the case of an ostrich burying its head in the sand!

UAE Football administrators; do not fall into this trap. Blame the players who chose to have a quarter pounder with Mcfries instead of being up to the responsibility of representing their nation. Treat them like the spoilt brats they are and place them under guard in a hotel for upcoming matches. When they complain, then remind them that they only got what they deserved.

Monday, June 8, 2009

After a long absence, I am back. There has been many things that I wish to comment upon, but alas, time is precious and I am busy with so many things. Unfortunately, many of my tidbits are depressing and I would hate to share my misery with the rest of you as I am sure that you all have enough problems in your life.

Regardless, there is one bit of ranting that I would share that I find absolutely ridiculous. To me, it is humorous and might bring a bit of smile to your lips. After all, what is life without some laughter to relieve our stress and everyday worries. This is about the not so recent policy of Dubai First Credit Cards, which is a member of Dubai Group, which is a member of Dubai Holding, which is a semi-government entity owned by HH Sheikh Mohamed Al Maktoum, the Prime Minister and Ruler of Dubai. Let me begin by a little background.

Dubai Group launched the Dubai First Credit Cards in the second quarter of 2007. After all, credit cards were a lucrative business with many residents being offered free credit. The thinking I presume was why not get a share of the pie. As an employee of a sister company, our phone numbers were shared with the group and sure enough, I received the solicitation from their sales people from the very beginning. I agreed and was given a monthly spending limit of 40,000 AED which was fine from my end.

Now, I believe in the usage of credit cards to pay for my daily expenses instead of cash. I ensure that I pay the full amount by the end of the month (it does not reach 40,000 AED or else I would be in the poor house) in order to not be charged any interest nor extra charges. As I have a Citibank Skywards Credit Card, the Dubai First was used sporadically and my thinking was it would be my emergency credit card and that is what I have used it for. Thus, I would not receive monthly statements except when I conducted one or two transactions on it.

Anyway, recently when conducting an online transcaction, I decided to use it in order to ensure that my other credit card was not stored on the system. The amount was only 200 AED. Upon receiving the statement, I was surprised to find out that my credit limit had been reduced. Not by half! Not by 70%!!! Not by 95%!!! But rather from 40,000 to 500 AED (i.e. by 98.75%). I was amused and called up the customer service center.

Apparently, I was one of the lucky ones as some people's MONTHLY limits were reduced to 100 AED. This was due to their new policy due to the credit crisis. After all, they are related to a bank, thus their risk exposure is 100%. While the rationale makes sense from a risk perspective, the whole concept is ridiculous. That means that all of the customers (provided they have had their credit limit reduced like mine) would only be able to conduct one or two transactions per month which I am sure is not enough to sustain the financial group's operations. It defeats the whole purpose of having the credit card!!! It is a classical case of short-term thinking whereas the company wants to have its cake and to eat it too. Whomever is their leader should be able to present at world-wide conferences for exactly What NOT to DO?!! It will certainly provide entertainment to the real business community.

What happened with me? I have retained my credit card for two reasons. Firstly, I like the last 4 digits of my credit card number. They are extremely unique. Secondly, and more importantly, I am a founding member which might be able to retain some value in the long term as I received my credit card in their first year of operation. Thus, I would like to retain that distinction. Overall, it is a funny story and limited thinking, do u not agree?!?!?!